Optimizing international technology diffusion: A middle-income country's perspective

Hwan Lin

Economic Modelling, 2010, vol. 27, issue 1, 54-66

Abstract: The paper develops a North-Middle-South model to formulate a middle economy that plays catch-up via imitative R&D to acquire newer technologies from a higher-wage innovative forerunner, while playing "reverse catch-up" via outbound FDI to transfer older technologies to a lower-wage follower. A critical policy dilemma facing the middle economy is how to balance its R&D-driven technology inflows against its FDI-driven technology outflows. Numerical simulations are used for dynamic welfare analysis. This paper finds that tightening FDI permits the middle economy to keep a lower saving rate without weakening its ability to acquire newer technologies in the long run.

Keywords: Innovation; Imitation; Technology; Diffusion; R&D; FDI (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (1)

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